Lauren Rudd: Stock gains lead to overall fear of impending doom

As the Dow Jones Industrial Average moved above the 15,000 mark, bedlam ensued on the floor of the New York Stock Exchange. There were shouts and hand clapping, an unusual show of emotion for that staid institution.

But it was not the Dow's metaphorical four-digit augmentation that was the epitome of my consternation that morning. Rather it was the seemingly never-ending phone calls asking if we were in the midst of another bubble, circa the dot-com or housing boom eras. We are not.

Every time there is a strong market rally, the Chicken Little syndrome sets in... The fear of impending doom is simply a promulgation of incorrect assumptions based on invalid data. The difficulty arises when you prattle under the auspices of being a purveyor of truth and rational reasoning.

While there is overwhelming data to refute those statements, thanks to the First Amendment you can go off half-cocked blathering prose that is tantamount to carrying a sign saying, "Repent now, the world is coming to an end," or worse, be blatantly wrong to those who trust your expertise.

For example, the edifice of austerity economics rests largely on an academic paper embraced by policy makers without it ever having been vetted. Published by economists Carmen Reinhart and Ken Rogoff, and touted by policymakers pushing government austerity, it is riddled with what are now well-known errors.

Niall Ferguson, the distinguished historian, was guilty of incredulous bigotry at a recent investors' conference.

Ferguson said John Maynard Keynes' famous statement, "In the long run we are all dead," stemmed from the fact that he was gay, had no intention of having children and was thus blinded to the importance of long-run considerations.

Ferguson's subsequent apology would have been more acceptable had not Brad DeLong, a professor of economics at the University of California, Berkeley, pointed out Ferguson had alleged that Keynes' views on the Treaty of Versailles were due to Keynes' homosexuality.

Ferguson's view is Keynes had a distinctive gay outlook on the issue and a gay crush on a German representative to the conference that led Keynes to adopt pro-German and pro-inflation opinions.

Interestingly, Keynes' long run statement appears not in his meteoric work, "A General Theory of Employment, Interest and Money," but rather in a 1923's "Tract on Monetary Reform." Writing about the fallacy of returning to a gold standard, he stated, "...the long run is a misleading guide to current affairs. In the long run we are all dead."

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Lauren Rudd: Stock gains lead to overall fear of impending doom

As the Dow Jones Industrial Average moved above the 15,000 mark, bedlam ensued on the floor of the New York Stock Exchange. There were shouts and hand clapping, an unusual show of emotion for that

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